SYSTEMIQ releases circular economy report ahead of Climate Week
Systems change company SYSTEMIQ has released a report on the circular economy on behalf of the SUN Foundation and with the help of the Ellen MacArthur Foundation.
Ahead of this year’s Climate Week, an annual showcase of leading climate action, the ‘Everything-as-a-Service’ (XAAS) report provides intel on how global communities can transform current “take-make-dispose” consumption models into circular structures in which companies provide products as a service. The report suggests that such models have the potential to power economic growth and competition – reducing total cost of ownership (TCO) by almost 40 per cent – with increased ‘positive environmental impact.’
XAAS models refer to the combination of tangible products and intangible services, comprising a jointly capable system that satisfies the final user needs, according to SYSTEMIQ. Incentivised circular economy strategies include long-lasting and circular design; use phase intensification; maintenance; repair; reuse; remanufacturing; refurbishing; and recycling. The report targets the use stage of consumption, as the emissions of this phase make up the majority of the product lifecycle footprint, according to the systems change company – 50 per cent for computer equipment; 60 per cent for capital goods; and 80 per cent for cars.
The paper consists of assessments of circular economics, obtained from over 50 experts across the field through a series of interviews. It states that a transformation to a circular economy would radically shift ownership to individual companies, and away from the consumer, resulting in an extension of product lifecycle by putting the onus on said companies to prevent their products from entering the waste stream. Companies are incentivised to optimise resource productivity through means such as designing longer-lasting products and incorporating maintenance; repair; reuse; remanufacturing; refurbishing; and recycling into their system thinking.
The XAAS report aims its attention at the manufacturing sector, laying out the ways in which circular systems can be designed and how these systems can be catalysed through digital technology, policy support, and collective industry action. The document features a toolkit that presents four building blocks with which cyclical ecosystems can be built – value proposition design; business model and financial design; circular product and operating model design; and ecosystem design. It also features design parameters, in order to optimise both economic and sustainability impact, as well as three deep dives showcasing successful transitions to XAAS models in cars, industrial equipment, and white goods.
XAAS models ultimately promote the circularity of materials, according to SYSTEMIQ. An example of the effect this can have that the report outlines, if such a model is designed ambitiously, is in the potential to decarbonise Battery Electric Vehicles (BEV) by 25 - 45 per cent through Car-as-a-Service models. Other examples that the report outlines exist in the reduction of the footprint of metal laser cutting machines by 37 - 65 per cent through Equipment-as-a-Service models, and in the reduction of the residential laundry footprint by 24 - 35 per cent through the use of White-Goods-as-a-Service models.
The report does state, however, that there are challenges to scaling the approach. It suggests that if the four design building blocks are not properly applied, and companies do not adopt sustainable strategies holistically, potential rebound effects – such as consumption increase and technological obsolescence – could result in the impact of circularity not reaching its full potential.
In spite of this concern, across industry sectors companies are already engaging in XAAS models, according to the report. These include – Rolls-Royce (power-by-the-hour), Michelin (tires-as-a-service), ShareNow (car-sharing), Signify (lighting-as-a-service), CWS (workwear-as-a-service) and TRUMPF’s (equipment-as-a-service).
Sophie Herrmann, Partner at SYSTEMIQ, commented: “People don’t need cars, but mobility; they don’t need washing machines, but clean clothes. XAAS provides an alternative way of doing business that meets societal needs with efficient resource management and lower environmental impact. Our report explains why and how innovative and bold XAAS models can deliver the much-needed shift to a circular economy.”
Dame Ellen MacArthur, Founder and Chair of Trustees, the Ellen MacArthur Foundation, said: "Waste and disposability are woven into today’s economy, fueling climate change and limiting opportunities for long-term economic prosperity. Everything-as-a-Service (XAAS) shows how – as part of a circular economy – we can change that and harness the power of design and innovation to deliver better outcomes for businesses, their customers, and the environment.”